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FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
Commission File Number 1-8292
HELM RESOURCES, INC.
(Exact name of registrant as specified in charter)
Delaware 59-0786066
(State or other jurisdiction (IRS EMPLOYER
incorporation or organization) Identification No.)
537 Steamboat Road
Greenwich, Connecticut 06830
(Address of principal executive offices)
203-629-1400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
As of August 12, 1996 there were 2,458,953 shares of the
Company's common stock, par value $.01 per share,
outstanding.
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PART I - FINANCIAL INFORMATION
Helm Resources, Inc. and Subsidiaries
Consolidated Balance Sheet
(In Thousands)
(Unaudited)
June 30, 1996
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $66
Accounts receivable, net 2,281
Inventories 232
Current portion of promissory notes
receivable from officers 163
Due from affiliates 36
Prepaid expenses 434
Other current assets 67
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TOTAL CURRENT ASSETS 3,279
INVESTMENTS IN AND DUE FROM AFFILIATES 2,008
PROMISSORY NOTES RECEIVABLE FROM OFFICERS 487
PROPERTY, PLANT AND EQUIPMENT, NET 2,472
DEFERRED CHARGES AND OTHER ASSETS 424
--------
$ 8,670
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HELM RESOURCES, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
(In Thousands)
(unaudited)
June 30, 1996
LIABILITIES AND SHAREHOLDER'S (DEFICIENCY)
CURRENT LIABILITIES:
Notes payable to affiliates $ 1,285
Revolving loan 1,250
Accounts payable 2,048
Accrued interest 182
Accrued expenses 938
Current portion of long-term debt 314
Due for contact settlement 259
Due to affiliates 421
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TOTAL CURRENT LIABILITIES 6,697
LONG-TERM DEBT, NET OF CURRENT PORTION 1,350
SUBORDINATED DEBENTURES 3,088
OTHER LIABILITIES 697
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TOTAL LIABILITIES 11,832
SHAREHOLDERS' DEFICIENCY (NOTE 5) (3,162)
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$ 8,670
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Helm Resources, Inc. and Subsidiaries
Consolidated Statements of Operations
(In Thousands, Except per Share Amounts)
(unaudited)
Three Months Ended
June 30,
1996 1995
REVENUES $4,892 $3,593
COSTS, EXPENSES AND OTHER:
Operating expenses 3,657 2,803
Selling, general and administrative
expenses 1,058 932
Gain on sale of securities (185) (130)
Equity in net (earnings)losses of
affiliates (50) (13)
Increase in underlying equity
of Intersystems, Inc. (42) (40)
Interest and debt expense 268 269
Interest income (22) (20)
----- -----
TOTAL COSTS, EXPENSES AND OTHER 4,684 3,801
----- -----
INCOME (LOSS) FROM CONTINUING OPERATIONS 208 (208)
----- -----
DISCONTINUED OPERATIONS OF AFFILIATE (168) -
----- -----
NET INCOME (LOSS) $ 40 $ (208)
====== ======
Earnings Per Share:
Continuing operations $ .07 $ (.11)
Discontinued operations (.07) -
------ ------
Net earnings (loss) $ - $ (.11)
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Average common shares outstanding 2,459 2,160
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Helm Resources, Inc. and Subsidiaries
Consolidated Statements of Operations
(In Thousands, Except per Share Amounts)
(unaudited)
Six Months Ended
June 30,
1996 1995
REVENUES $9,877 $7,095
COSTS, EXPENSES, AND OTHER:
Operating expenses 7,437 5,541
Selling, general and
administrative expenses 2,060 1,965
Gain on sale of securities (226) (130)
Equity in net (earnings) losses
of affiliates 8 87
Increase in underlying equity of
Intersystems, Inc. (42) (40)
Interest and debt expense 467 490
Provision for settlement of
litigation 275 -
Interest income (41) (40)
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TOTAL COSTS, EXPENSES AND OTHER 9,938 7,873
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INCOME (LOSS) FROM CONTINUING OPERATIONS (61) (778)
----- -----
DISCONTINUED OPERATIONS OF AFFILIATE (168) -
----- -----
NET INCOME (LOSS) $ (229) $ (778)
Earnings Per Share:
Continuing operations $ (.05) $ (.39)
Discontinued operations (.07) -
------ ------
Net earnings (loss) $ (.12) $ (.39)
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Average common shares outstanding 2,450 2,160
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Helm Resources, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In Thousands)
(unaudited)
Six Months Ended
June 30,
1996 1995
Net cash provided by (used in)
operating activities $ (69) $ (75)
----- -----
Cash flows from investing activities:
Decrease (increase) in investments
in and due from affiliates 635 53
Proceeds from sales of securities 70 70
Proceeds from sale of finance
subsidiary portfolio - 467
Additions to property, plant and
equipment (356) (91)
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349 499
Cash flows from financing activities:
Increase (decrease) in notes payable
and long-term debt (648) (510)
Repayment of term loan - (131)
Proceeds from promissory note - 238
Payment on contract settlement - (33)
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(648) (436)
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NET INCREASE (DECREASE) IN CASH (368) (12)
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CASH BEGINNING OF PERIOD 434 41
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CASH END OF PERIOD $ 66 $ 29
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Cash paid during the period for:
Interest $ 110 $ 277
Taxes - -
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HELM RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
Note 1. Management believes the accompanying unaudited
condensed consolidated financial statements of
Helm Resources, Inc. and subsidiaries ( the
"Company") include all adjustments (consisting
only of normal recurring accruals) required to
present fairly the financial statements for the
periods presented. The results of operations for
any interim period are not necessarily indicative
of the annual results of operations.
Note 2. Primary earnings per share is computed by dividing
earnings, after deducting the preferred stock
dividend requirements of $31,600 and $63,200 in
the 1996 three month and six month periods and
$31,600 and $63,200 in the 1995 three month and
six month periods, by the average common shares
outstanding during each period.
Note 3. Inventories consist of packaging supplies.
Note 4. Summarized Financial Data (in thousands):
Intersystems, Inc. Three Months Ended
(24% owned in 1996 and 41% in 1995) June 30,
1996 1995
REVENUES $5,067 $3,906
Operating expenses 3,633 2,608
Selling, general and administrative
expenses 1,330 1,073
Interest expense (net) 141 193
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TOTAL COST AND EXPENSES 5,104 3,874
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INCOME (LOSS) FROM CONTINUING OPERATION (37) 32
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DISCONTINUED OPERATIONS (578) -
----- -----
NET INCOME LOSS $ (615) $ 32
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HELM RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
Six Months Ended
June 30,
1996 1995
REVENUES $ 8,971 $ 7,159
Operating expenses 6,225 4,839
Selling, general and administrative
expenses 2,586 2,175
Settlement of note receivable-sale
of trading business 45 -
Interest expense (net) 303 363
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TOTAL COST AND EXPENSES 9,159 7,377
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INCOME (LOSS) FROM CONTINUING OPERATIONS (188) (218)
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DISCONTINUED OPERATIONS (730) -
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NET INCOME (LOSS) $ (918) $ (218)
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Note 5. In March 1995, the Financial Accounting Standards
Board issued Statement of Financial Accounting
Standards No. 121, "Accounting for Impairment of
Long-lived Assets and for Long-lived Assets to be
Disposed of (SFAS N0. 121). SFAS No. 121
requires, among other things, that impairment
losses on assets to be held, and gains or losses
from assets that are expected to be disposed of,
be included as a component of income from
continuing operations. The Company adopted SFAS
No. 121 in 1996 and its implementation did not
have a material effect on the consolidated
financial statements.
In October 1995, the Financial Accounting
Standards Board issued Statement of Financial
Accounting Standards No. 12, "Accounting for Stock-
Based Compensation" (SFAS No.123). SFAS No. 123
encourages entities to adopt the fair value method
in place of the provisions of Accounting
Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" (APB No. 25), for all
arrangements under which employees receive shares
of stock or other equity instruments of the
employer or the employer incurs liabilities to
employees in amounts based on the price of its
stock. The Company did not adopt the fair market
method encouraged by SFAS No. 123 and will
continue to account for such transactions in
accordance with APB No. 25. However, the Company
will be required to provide additional disclosures
for the 1996 annual financial statements providing
pro forma effects as if the Company had elected to
adopt SFAS No.123.
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Note 6. Stockholders' Equity (in Thousands)
Common Stock Additional
Preferred Stock $.01 par value Paid
Shares Amount Shares Amount in capital
Balance
Jan. 1, 1996 40 $ - 2,399 $ 24 $ 19,889
22
Common stock
issued,
primarily for
accrued
interest - - 60 1 45
----- ----- ----- ----- ------
Balance
June 30, 1996 40 $ - 2,459 $ 25 $ 19,956
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Unrealized gain Retained
on available for Earnings Treasury
sale securities (Deficit) Stock Total
Balance
Jan. 1, 1996 $ 763 $(23,501) $ (29) $(2,854)
22
Common stock
issued, primarily
for accrued interest - - - 46
Change in realized
gain on available
for sale securities (147) - - (147)
Net (loss) - (229) - (229)
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Balance
June 30, 1996 $ 616 $(23,730) $ (29) $(3,162)
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Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTH PERIODS ENDED JUNE 30, 1996 AND JUNE 30, 1995
Revenue increased by $1,299,000 (36%) to $4,892,000 in
the 1996 period compared to $3,593,000 in the 1995 period
primarily due to an increase in packaging and storage volume
at Interpak Terminals.
Operating expenses increased $854,000 (30%)to $
3,657,000 in the 1996 period from $2,803,000 in the 1995
period due to increased labor cost, packaging supply cost
and rent to accommodate the increase in volume.
Selling general and administrative expense increased
$126,000 (13%) due to moving expense, employee benefits and
legal cost.
In 1996, $106,000 of gain on sale of securities
represents gains on the sale of 65,500 shares of Intersystem
common stock. The additional gain of $79,000 is from the
sale of 10,720 shares of Professional Financial Services,
Inc., 4,783 shares of Unapix Entertainment, Inc., 14,350
shares of Intersystems and 86,098 warrants, which expire in
2006, to purchase a like number of shares of Helm common
stock at $1.25 per share, all at market value, to an officer
of the Company in exchange for $91,250 principal amount of
8% debenture and accrued interest thereon of $16,203. In
1995 the gain represents the sale of 28,749 shares of
restricted common stock of Unapix Entertainment Inc. and
20,001 shares of restricted common stock of Professional
Financial Services, Inc. at market value to two officers of
the Company.
Discontinued operations is the Company's proportionate
share of Intersystems loss from discontinued operations.
SIX MONTH PERIODS ENDED JUNE 30, 1996 AND JUNE 30, 1995
Revenue increased by $2,782,000 (39%) to $9,877,000 in
the 1996 period compared to $7,095,000 in the 1995 period
primarily due to an increase in packaging and storage volume
at Interpak Terminals.
Operating expenses increased $1,896,000 (34%) to
$7,437,000 in the 1996 period from $5,541,000 in the 1995
period due to
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increased labor cost, packaging supply cost and rent to
accommodate the increase in volume.
Gain on sales of securities in 1996 includes the gain
described in the three month period above and a gain on the
sale of 15,900 shares of Intersystem common stock and 2,000
shares of Unapix common stock in the first quarter of 1996.
The 1995 gain is the same as described above for the three
months ended June 30, 1995.
The provision for settlement of litigation of $275,000
in 1996 is for the settlement of all claims related to a
lawsuit against the Company and Interpak which was described
in Part II-Item 1 of the Company's Form 10QSB for the first
quarter of 1996.
Impact of Inflation
Inflation has not had a significant impact on the
Company's operations.
Liquidity and Capital Resources
Operating activities for the six months ended June 30,
1996 used cash of $69,000; $635,000 was provided by payments
from affiliates, and $648,000 was used for repayments of
notes
payable and long-term debt; additions to plant and equipment
used $356,000, which resulted in a decrease in cash of
$368,000.
At June 30, 1996, the Company had a working capital
deficit of $3,418,000, which included $1,870,000 for
Interpak. The Interpak working capital deficit included
$1,250,000 under a revolving loan agreement which expires in
February 1997. The line, which has an annual interest rate
of prime plus 1.25%, was fully borrowed at June 30, 1996, is
secured by substantially all of the assets of Interpak, as
well as Interpak's common stock and 400,000 shares of common
stock of an affiliated company, and is guaranteed by the
Company. It is expected that Interpak's operations should be
sufficient to meet its other obligations as they become due.
The balance of the working capital deficit included
approximately $1,285,000 of payables to affiliates as to
which the Company is confident of its ability to fund as
needed from the sale of investment securities.
Future liquidity sources for the parent company will
consist of reimbursement of general and administrative
expenses from subsidiaries and affiliates, available funds
from the earnings of Interpak and possible sales of
investment securities. On a longer term basis, the Company
may be required to seek additional liquidity through debt
and equity offerings of the company and/or its subsidiaries.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned there unto duly
authorized.
Helm Resources, Inc.
August 14, 1996 /S/ Daniel T. Murphy
Daniel T. Murphy
Executive Vice President
Chief Accounting and
Financial Officer
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